Theater Chains Irked Over Netflix Movie Deal With iPic Entertainment

Reed Hastings, left, CEO of Netflix, a global provider of streaming movies and TV series, and Ted Sarandos Chief Content Officer of Netflix, pose in Marseille, southern France , Wednesday, May 4, 2016. Marseille is the first TV series produced by Netflix in France. (AP Photo/Claude Paris)

Netflix has had its share of adversaries over the years. The streaming service has usurped every entity of the entertainment industry that it’s taken an interest in and it’s now targeting movie theaters. The strain between Netflix and theater owners is coming to a head as the on-demand giant makes its latest move onto the big screen. In a deal inked with iPic Entertainment, Netflix is targeting theatrical distribution in its first long-term agreement with a theater chain.

“Consumer choice is a pillar of our philosophy and the unparalleled level of comfort and hospitality offered at iPic made this a natural partnership,” said Ted Sarandos, Netflix chief content officer, in a written statement.

Netflix currently has over 83 million members spanning 190 plus countries, while iPic membership tops 1.6 million. Under the terms of this 10-picture deal, the luxury theater chain will screen original Netflix films in its 15 upscale theaters in cities including Los Angeles and New York. The partnership will launch Oct. 7 at 8:00p.m. with the action-packed war thriller The Siege of Jadotville, starring Jamie Dornan and Guillaume Canet, at iPic Theaters Los Angeles while simultaneously streaming on Netflix.

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“Netflix is all about content and this deal gives them the ability to get that content onto the most immersive and impactful platform, which is the big screen of the brick-and-mortar movie theater,” says senior media analyst for comScore, Paul Dergarabedian. “This should not be viewed as a revolution, but more of an evolution of how movies are brought to audiences and may represent a shift toward a more cooperative alliance between theater chains and the on-demand giant."

Dergarabedian also acknowledges the concerns of the theater industry, adding, "That said, any deal like this will be looked at with extreme skepticism by most theater owners who are naturally averse to letting any wolf through the door, or in this case, a shortened or even non-existent video window.”

In an already over-crowded film market grappling for those few-in-number coveted Oscar nods, traditional movie makers are not happy with the streaming service. The National Association of Theatre Owners voiced their concerns in a statement by president and chief executive, John Fithian. “We all should tread lightly and be mindful that over the years, the film industry's success is a direct result of a highly successful collaboration between filmmakers, distributors and exhibitors,” said Fithian. “Simultaneous release, in practice, has reduced both theatrical and home revenues when it has been tried.”

Netflix has dabbled in such dealings before, including a simultaneous release of its first original feature film last year, Beasts of No Nation, which was released online and in select U.S. theaters. And, earlier this year with Crouching Tiger, Hidden Dragon: Sword of Destiny, which was released in IMAX theaters concurrent with its streaming release.

Already a thorn in the side of the television industry, Netflix has become a top Emmy game favorite, receiving their first nods back in 2013, with 14 nominations and three wins. 2014 saw Netflix’s number of nominations surge 121.43% to 31, making Netflix the seventh-most nominated network with the fifth-most Emmy wins of any network, as previously reported by FORBES. With this accelerated growth in television, it’s understandable that the movie theater industry is less than thrilled to have Netflix on their turf.

In opposition of the traditional film industry model, which gives theaters the exclusive rights to show new movies prior to them becoming available for in-home viewing, Netflix is going in this new direction with claims that the traditional theatrical exclusivity window is out-of-touch. Theater owners are resisting the change and remaining steadfast in their beliefs in the traditional business model as an imperative means to their industry, citing concerns over ticket revenue sales among other things.

iPic Entertainment, founded in 2006 by President and CEO, Hamid Hashemi, has fought Hollywood before and is currently involved in a legal battle with major theater chains over the use of clearance agreements that grant theaters permission from studios to exclusively show movies in their cinemas within certain geographic areas. iPic has accused Regal and AMC of using clearances to stifle competition. The U.S. Department of Justice is examining allegations from independent theater owners claiming the big chains are using their market clout to block smaller rivals from receiving first-run movies, as reported by the LA Times.

Hashemi has confidence in the deal. “We are very excited to announce this significant game-changer for consumers and fans, paving way for a new frontier in shared experience viewing of Netflix entertainment.”

Netflix has been able to keep up with, if not remain one step ahead of, the rapidly evolving habits of consumers. Just where will Netflix branch out to next? Only time will tell though it’s obvious at this point that breaking new ground isn’t anything its inclined to shy away from.

I have worked for several years as a freelance journalist covering breaking news with Reuters and entertainment-related stories with Variety. I am excited to now be a regular Contributor with Forbes covering film, television and music. I look forward to learning, and writin...